| PARLIAMENT | Effective Date | Effect |
| Bills (and Acts not yet in force) | ||
| GMP Conversion – Conversion of GMPs Act (Royal Assent 28/4/2022) | Not yet in force | Will facilitate converting GMPs once relevant Regulations made. Still awaiting DWP’s consultation on the Regulations. Click here for article in June 2022 Pensions Compass. |
| Online Safety Bill | Will be enacted Autumn 2023? | Hopefully will assist in combating fraud including pension fraud. |
| Data Protection and Digital Information (No. 2) Bill | Bill introduced on 8 March 2023 in House of Commons, replacing the original Bill. To be enacted by Winter 2023? | Updating the UK’s data protection laws, to reduce burden whilst ensuring standards. The No. 2 Bill provides a new version of the GDPR replacing the EU’s data protection laws. Numerous sets of regulations are likely to be needed before the Bill once enacted can come fully into effect. The Second Reading of the Bill in the House of Commons took place on 17 April 2023 and the Committee Stage began on 10 May 2023. |
| Economic Activity of Public Bodies (Overseas Matters) Bill | Introduced June 2023. To be enacted Autumn 2023? | Obliges public bodies including, it seems, the Local Government Pension Scheme to conduct procurement and investment activity in ways not contrary to Government policy. (Bill previously named the Boycotts, Disinvestment and Sanctions Bill). |
| Pensions Dashboards (Prohibition of Indemnification) Act | Royal Assent 2 April 2023. Not yet in force, may be later this year. | Trustees reimbursing themselves out of scheme assets for TPR fines under Dashboard Regulations to constitute criminal offence. |
| Finance Bill 2023-24 | Bill not yet introduced in Parliament. Expected into force 6 April 2024. | On 18 July 2023 draft legislation was published for Finance Bill 2023-24. The Consultation on the draft clauses closed on 12 September 2023. Government will consider the responses in preparing Finance Bill 2023-24. The draft clauses relate to abolition of the lifetime allowance, and modernisation of tax relief at source. Click here for the article in this Pensions Compass. The Government’s Policy Paper issued on 18 July 2023 indicates that from 6 April 2024 the present benign treatment of lump sum death benefits where a member dies under age 75 may no longer continue. |
| Economic Crime and Corporate Transparency Bill | Bill expected to receive Royal Assent in 2023. Secondary legislation will be needed. | Tightens operation of Companies House and company structures e.g. in relation to corporate directors. |
| Recent Acts in force | ||
| Pensions (Extension of Automatic Enrolment) (No. 2) Act 2023 | Royal Assent 18 September 2023 | The Act empowers the Secretary of State to make Regulations extending (1) auto-enrolment to all jobholders aged at least 18 in place of the current minimum age of 22 years, and (2) removing the lower qualifying earnings threshold. The Act requires the Secretary of State to consult on the Regulations. WB comment: implementation remains uncertain as the Consultation has yet to be issued. |
| Retained EU Law (Revocation and Reform) Act 2023 | Royal Assent 29 June 2023 | List of Retained EU law to be revoked by 31 December 2023. For Regulations restating certain parts of EU Retained Law otherwise revoked by 31 December 2023, see below under Recent Regulations. |
| Financial Services and Markets Act 2023 | Royal Assent 29 June 2023 | Updates the UK’s framework for financial services. |
| Finance (No.2) Act 2023 | 6 April 2023 | Click here for article in May 2023 Pensions Compass on: • abolition of lifetime allowance charges • increase to annual allowance • increase in money purchase allowance • freezing of limit on pension commencement lump sums • permitting new pension accrual for members with ‘protection’ • changes in tax treatment of certain lump sums in excess of the lifetime allowance Other Finance (No. 2) Act changes include: • provision for HMRC to pay top-ups directly to low earning members using net pay arrangements, equating them to members receiving tax relief at source • tax changes to support the Dormant Assets Scheme. |
| Dormant Assets Act | 6 June 2022 in full | To reunite individuals with ‘lost’ financial assets including lost life insurance and retirement income policies, and where not possible, providing for social and environmental uses. |
| Forthcoming Regulations (including expected Regulations) | ||
| DB schemes – Funding and Investment Strategy Amendment Regulations | Timing uncertain – may be Spring 2024 | DWP Consultation on draft Regulations opened in July 2022 and closed October 2022 and DWP response awaited. The (draft) Regulations reflect the significant amendments to the Pensions Act 2004 scheme specific funding regime made by Pension Schemes Act 2021. Click here for the article in February 2023 Pensions Compass and here for the article in September 2022 Pensions Compass. The House of Commons Work and Pensions Committee has urged a more relaxed approach for “open” DB schemes (19 July 2023 letter to DWP). |
| GMP Conversion Regulations | Timing uncertain, Consultation on draft Regulations awaited | See above under Conversion of GMPs Act |
| Notifiable Events Amendment Regulations | Timing uncertain – may be late 2023 | Additional Events to be notified to TPR and to scheme trustees (change in control of an employer, sale of material proportion of business or assets and/or granting of certain security rights). DWP’s Consultation on these proposed controversial Regulations closed on 27 October 2021 and DWP’s Response is long overdue. Click here to listen to our December 2021 Podcast. |
| Recent Regulations | ||
| Regulations restating Retained EU Law otherwise lost by 31 December 2023 | 18 September 2023 Regulations to come into force by 31 December 2023 | Various sets of Regulations retaining in UK law certain effects of EU case law including the upshot of the ‘Hampshire’ case relating to calculating PPF compensation. |
| Pensions Dashboards Amendment Regulations | 9 August 2023 | Click here for the article in December 2022 Pensions Compass and here for the article in March 2022 Pensions Compass. The December 2022 Regulations specified detailed connection deadlines including: Large schemes (minimum 1000 active/deferred members at the relevant date) to connect to the Dashboard in stages between April 2023 to September 2024 and Medium Schemes between October 2024 and October 2025. However, in March 2023 the Government announced a review of the timetable due to IT connection issues. The Pensions Dashboards Amendment Regulations specify a single statutory connection deadline and provide for staging to be included in Guidance (still awaited). Click here for the article in Part 4 of July 2023 Pensions Compass. |
| DC schemes – Default funds illiquid assets: Administration, Investment, Charges and Governance and Pensions Dashboard Amendment Regulations | Regulations came into force on 6 April 2023 | DWP Consultation opened October 2022 and closed 10 November 2022. Encouraging scheme trustees to invest part of auto – enrolment Default funds in illiquid assets, such as infrastructure funds and requiring relevant DC Schemes to disclose and explain their policy in respect of illiquid investments. Click here for article in December 2022 Pensions Compass. Statutory Guidance has also been published. These Regulations also make a minor amendment to the then Dashboards’ connection timetable. |
| Disclosure of Restricted Information Order | 28 December 2022 | Enabling the Money and Pensions Service to receive restricted information from TPR. |
| Climate Change – Governance and Reporting Amendment Regulations | 1 October 2022 | In scope schemes to measure their alignment with Paris Agreement climate goal “so far as they are able to”. Click here for the article in July 2023 Pensions Compass, here for the article in May 2023 Pensions Compass and here for the September 2022 Pensions Compass article. |
| Money Purchase Statements Disclosure Amendment Regulations | 1 October 2022 | Provisions for simpler annual benefit statements for members of auto-enrolment schemes and for scheme trustees/managers to have regard to published statutory guidance. |
| Fiduciary Managers and Investment Consultations – Amendment Regulations | 1 October 2022 | Amendment of pension legislation (Scheme Administration Regulations 1996) relating to trustees’ use of fiduciary managers and investment consultations with 2010 Order made by the Competition and Markets Authority. |
| RECENT COURT DECISIONS | |
| FROM THE COURTS | RECENT DECISIONS |
| Surplus on winding up Standard Life Trustee 1 August 2023 | Decision of Inner House of Court of Session of Scotland in the context of the scheme rules which were silent on the point, the Court decided the surplus should be held on resulting trust for the current employers. Click here for the article in Part 2 of this Pensions Compass. |
| Trustee’s petition to wind up scheme’s sponsoring employers. Brass Trustees v Goldstone and PPF. 31 July 2023 | High Court approval given to the scheme trustee to issue petition to wind up the scheme’s sponsoring employers. |
| Trustee asks Court about alteration powers BBC v BBC Pension Trust & Another 28 July 2023 | The High Court decided that, based on the scheme rules, members’ “interests” extend to future benefits as well as past. It is reported that on 15 September 2023 the BBC were given permission to appeal to the Court of Appeal. Click here for the article in Part 2 of this Pensions Compass. |
| TPR’s anti-avoidance powers: Contribution Notices Shah v TPR 28 July 2023 | On 28 July 2023 the Upper Tribunal upheld Contribution Notices issued in 2020 and dismissed Mr Shah’s appeal. Click here for the article in Part 2 of July 2023 Pensions Compass – Pension cases in the pipeline. |
| Tax relief denied on in specie member contributions Killick & Co LLP v HMRC First Tier Tribunal (“FTT”) 25 July 2023 | The FTT upheld HMRC’s withdrawal of tax relief for in specie member contributions under the Killick & Co SIPP, following the Upper Tax Tribunal’s decision in Sippchoice on 12 May 2020. |
| Climate Change – Trustee Directors’ duties McGaughey v USS Court of Appeal, 21 July 2023 | The Court of Appeal dismissal appeals: the two pension scheme members could not bring a derivative action obliging the corporate trustee to pursue an action against its directors for various alleged failures to move the pension scheme away from investing in fossil fuels. Click here for the article in Part 1 of this Pensions Compass. |
| Validity of amendments in absence of section 37 actuarial written confirmation Virgin Media v NTL Pensions 16 June 2023 | Virgin asked the High Court to decide whether certain scheme amendments relating to revaluation were valid. Being contracted-out, it was argued the scheme amendments affecting contracted -out benefits should have been accompanied by written actuarial confirmation under section 37 Pension Schemes Act 1993. For the purposes of the case the Court was asked to assume there was no actuarial confirmation. The case was heard on 2 May 2023 and judgment given on 16 June 2023. The High Court decided that, in the (assumed) absence of written actuarial confirmation, the amendments in question were void. Permission to appeal to the Court of Appeal has been granted. Click here for the article in this Pensions Compass. |
| Climate Change – Employers’ duties 12 May and 24 July 2023 ClientEarth v Shell PLC | The environmental charity, ClientEarth, sought Court permission to bring a claim against the board of Directors of Shell PLC, alleging the board had failed to implement an energy transition plan aligning with targets in the Paris Agreement. On 12 May 2023 on the papers, the Court refused permission saying that the evidence “falls some way short of establishing a prima facie case that the way in which Shell’s business is being managed by the directors could not properly be regarded by them as in the best interests of Shell’s members as a whole”. After a subsequent oral hearing, the High Court on 24 July 2023 confirmed its original decision. Click here for the article in Part 1 of this Pensions Compass; and click here for the article in July 2023 Pensions Compass and here for the article in May 2023 Pensions Compass. ClientEarth has announced it will seek permission to appeal the High Court’s latest decision. |
| Tax – Employer/Trustee Transactions Morgan Lloyd v Trustees HMRC First Tier Tribunal 31 March 2023 | The FTT upheld the tax charges on the transactions involving sale of Intellectual Property to the pension scheme and certain loans. |
| Creditor’s right to force draw down pension Manolete Partners PLC v White High Court 16 March 2023 | Whether the Court should direct a member, a former director of a company, to draw his pension to satisfy the creditor’s claim for breach of director’s duties. The Court so ordered saying that section 91(2) Pensions Act 1995 was no bar as the member was to be paid his pension, albeit it would then be used by his creditor. |
| Bankruptcy Wilson v McNamara and Others Court of Appeal 16 January 2023 | The trustees in bankruptcy appealed the High Court’s decision on 15 February 2022, arguing there is justification for not shielding the Irish pension scheme from the English bankruptcy (the High Court had decided the Irish pension scheme rights were beyond the English trustees in bankruptcy’s reach, click here for the article in the 2022 Pensions Compass). The Court of Appeal unanimously upheld the High Court’s decision: the justification arguments had been raised far too late and could not now be heard. In the absence of any further appeal, it seems Mr McNamara’s pension rights under his Irish pension scheme are safe (Wedlake Bell acts for the pension scheme trustees). |
| Age Discrimination: Pre-December 2006 Benefits Beattie v 20-20 Trustee Services Employment Appeal Tribunal 7 November 2022 | On DWP’s appeal, the EAT decided that age discrimination claims for pre 1 December 2006 benefits brought before 31 December 2020 (the end of the further implementation period for the EU Withdrawal Act 2018) succeeded but not claims made after this date. |
| Corrections Viavi Solutions UK High Court 22 September 2022 | Good explanation of the circumstances in which the Court will order Rectification (correction) of scheme rules. Click here for the article in February 2023 Pensions Compass. |
| RPI/CPIH Judicial Review High Court 1 September 2022 | In 2021, three pension schemes announced judicial review proceedings relating to the Government’s decisions in 2019/2020 to align the basis of RPI with CPIH from 2030 and without any compensation. Click here to see our article in December 2020 Pensions Compass “RPI – light at the end of the tunnel”. In its judgment on 1 September 2022, the High Court upheld the Government’s decisions. |
| Forfeiting arrears due to members more than 6 years ago, and trustees recouping overpayments CMG Trustee v CGI Limited High Court, 11 August 2022 | Members had been paid extra pension benefits in the past following the scheme’s sex equalisation process and other scheme amendments. The employer argued that the arrears paid were too great and should in accordance with its reading of the scheme’s rule be limited to amounts due not more than 6 years previously and even though the members concerned were unaware of their claims. The High Court upheld the employer’s view and also explained how the legislation relating to trustees recouping overpayments from future pension works. On 24 February 2023 the scheme trustees were given permission to appeal to the Court of Appeal. The appeal hearing has been listed for the 10 or 11 October 2023. NB forfeiture and recoupment are complex legal areas on which legal advice is essential. |
| Tax treatment of facilitation payments E.ON UK v HMRC Upper Tribunal July 2022 | Whether employer payments to employees regarding adverse pension scheme changes are taxable. The First-Tier Tribunal ruled, yes. The Upper Tribunal ruled, no, on the basis that the payments were not “from” the employment. |
| Debts owed by member – Creditor enforcing against personal pensions (1) Bacci v Green, High Court 7 March 2022 (2) Brake v Guy High Court 11 July 2022; (3) Lindsay v O’Loughnane High Court 14 July 2022 | Broad overview: these three High Court cases relate to where scheme member X is legally due to pay Y – can X be forced to drawdown on his personal pension to enable X to pay Y? The Court’s broad answer was, yes. It granted Y injunctions to force X to drawdown (in the Bacci case, subject to the existing pension sharing order in favour of the member’s former wife). Our specialist Insolvency Team can assist in such cases (see also below re the Wilson v McNamara case where Wedlake Bell act for the scheme trustee). In Bacci v Green the debt arose out of the member’s fraud and so the Order for payment of the debt survived Mr Green’s bankruptcy and remained in force. On 8 November 2022 the Court of Appeal upheld the High Court’s decision. In the context of an occupational pension scheme, see also the judgment in Manolete Partners PLC v White reported below. |
| FROM THE COURTS | FUTURE CASES |
| Forfeiture of pension benefits, and recouping overpayments – CMG Trustee v CGI Limited | As mentioned above, permission given on 24 February 2023 to appeal the 11 August 2022 High Court decision. The Court of Appeal hearing is due on 10 or 11 October 2023. Click here for the article in July 2023 Pensions Compass (Part 2 – Pension cases in the pipeline). |
| OTHER DEVELOPMENTS | |
| PPF | |
| PPF Levy for 2024/2025 | The PPF published its Consultation on the (draft) Levy Rules for PPF Levy Year 2024/2025 on 11 September 2023. The Consultation closes on 30 October 2023. The PPF expect levy to reduce by half compared to the 2023/2024 estimate. |
| TPR | |
| TPR blogs on Climate Change | TPR’s blogs: 29 August 2023 “How trustees can help make climate scenario analysis decision – useful”. TPR urges trustees to improve their climate reporting – click here for the article in this Pensions Compass. Click here for our article in July 2023 Pensions Compass on TPR’s blog on 17 May 2023 “ESG elephant is now in the room”. |
| TPR revised Code of Practice for DC schemes | On 25 August 2023, TPR published the revised Code of Practice No. 13 re schemes providing money purchase benefits plus ancillary detailed Guidance relating to Communications and Reporting, and DC Investment Guidance. The updated Code and Guidance reflect the impact of legislative changes in recent years. |
| TPR and DWP – Memorandum of Understanding re prosecution of new criminal offences | On 7 February 2023 TPR and DWP entered into a Memorandum of Understanding with DWP as to which body would prosecute criminal offences under Pension Schemes Act 2021. In general, the prosecutor will be TPR. |
| TPR further Guidance | (1) On 12th January 2023 TPR updated its November 2022 Guidance on dealing with Transfer requests. (2) On 28 March 2023 TPR published Guidance for employers and trustees in relation to Equality, Diversity and Inclusion. (3) On 10 August 2023 TPR issued updated Guidance on Superfunds, recognising that the Government’s intention to legislate for Superfunds and its Call for Evidence regarding other consolidation options will take time. Click here for the Mansion House Reforms article in Part 4 of this Pensions Compass. |
| TPR’s Consultation on its proposed new DB Funding Code of Practice | On 16 December 2022, TPR published its Consultation on its proposed DB Funding Code of Practice, which closed on 24 March 2023. Click here for the article in February 2023 Pensions Compass. The new Code of Practice is not expected to come into force until Q1 2024. The new Code is ancillary to the proposed Regulations amending the Pensions Act 2004 scheme specific funding regime – see under Parliament in this Ready Reckoner. |
| TPR’s Annual Funding Statement 2023 | This Annual Statement provides an update on TPR’s thinking on scheme Valuations, especially Valuations in the year from 22 September 2022. |
| TPR’s Single Code of Practice, now to be called the General Code of Practice | On 17 March 2021, TPR consulted on amalgamating 15 individual Codes into a Single New Code. The Consultation closed on 26 May 2021. On 24 August 2021 TPR published its interim response. On 9 March 2023 it was reported that the Single Code is likely to be laid in Parliament in Spring 2023 and would be called the “General Code”. TPR’s Corporate Plan published on 21 April 2023 now states the General Code will be launched during the year – we understand this may be in Q4 of 2023. WB comment: This is a mammoth undertaking by TPR – hopefully a useful and more navigable Code will result. Click here for the article in February 2023 Pensions Compass. |
| HMRC | |
| Regulation of Pensions Tax Advice – HMRC’s proposals | On 23 March 2021 HMRC proposed that all tax advisers should have mandatory professional indemnity insurance, and how to define “tax advice” for these purposes. The Consultation closed on 15 June 2021. Subsequently HMRC announced it would not pursue mandatory insurance. HMRC continues to consider how best to protect consumers and to regulate tax advisers including tax agents. On 11 May 2023 HMRC published an updated Standards for Agents. |
| HMRC Newsletter on GMP Equalisation and Tax | HMRC’s Newsletter of 6 April 2022 gives some guidance on the tax treatment of Transfer top – ups including where a top – up is paid direct to a member as a lump sum. Some modest guidance on GMP conversion is also included. Click here for the article in June 2022 Pensions Compass. |
| HMRC Newsletters re March 2023 Budget | On 16 March 2023, HMRC issued newsletter 148 relating to the abolition of the lifetime allowance charge and other changes announced in 15 March 2023 Budget. HMRC updated its guidance on 27 March 2023. In their newsletter 149 published 26 April 2023 HMRC commented further. Click here for the article in May 2023 Pensions Compass on the Budget 2023 changes. |
| HMRC Newsletter 152, 20 July 2023 | HMRC’s comments on the draft clauses for Finance Bill 2023-2024, (see under “Parliament” in this Pensions Compass) particularly in relation to the abolition of the Lifetime Allowance. |
| PENSIONS DASHBOARDS | |
| PASA Guidance on Dashboards values | August 2023 – PASA published its guidance on data accuracy for DB schemes; and June 2023 – PASA published its Dashboards Values Guidance – tips for trustees and others on providing value data to pensions dashboards. |
| Pensions Dashboards Programme (PDP) | In August the PDP issued an Update confirming they were working on re-setting the delivery plan for the new connection deadline of 31 October 2026 but did not indicate when staging guidance would be issued. |
| TPR Consultation on its Dashboards Compliance and Enforcement Policy | TPR’s Consultation opened on 24 November 2022 and closed on 24 February 2023. On 8 June 2023 TPR announced it was considering the impact of the Dashboards Amendment Regulations 2023 on its draft Policy. See also under Parliament in this Pensions Compass. |
| TPR updated Guidance in light of Dashboard Amendment Regulations | In July 2023 TPR updated its Guidance to include information on how trustees will be expected to show they have had regard to guidance on staging timelines (once the guidance has been published). June 2023 TPR revised its Guidance in the light of the Dashboard Amendment Regulations which came into force on 9 August 2023. Click here for the article in Part 4 of July 2023 Pensions Compass entitled “Dashboards Dashed ?” |
| TPR blog re getting data ready for dashboards | June 2023 blog: schemes need to be data ready – the relevant data needs to be “accessible, accurate and available digitally – a scanned document or PDF isn’t enough.” |
| DWP updated Guidance on schemes deferring connection | On 9 August 2023 the DWP issued updated Guidance on schemes applying to defer connection beyond 31 October 2026 in limited circumstances. |
| DERIVATIVES | |
| DERIVATIVES Schemes using liability driven investment (LDI) | On 24 October 2022 the House of Commons’ Work and Pensions Committee (WPC) announced an Enquiry into pension funds with hedging portfolios. Click here for the article in December 2022 Pensions Compass on derivative investments. In the WPC Committee hearing on 22 March 2023 TPR stated that going forward it would collect more data on schemes LDI funds to help monitor systemic risk and to develop standards for LDI investment. The Bank of England’s Financial Policy Committee has published recommendations for maintaining resilience This follows on from the severe dislocation in the gilt market in autumn 2022 and the knock – on for some schemes LDIs portfolios, leading to Bank of England action. |
| DC VALUE Value for Money (“VFM”) for DC Pensions | On 30 January 2023 DWP, FCA and TPR issued a joint Consultation to obtain views on the “metrics, standards and public disclosure” of data required under the proposed VFM framework. The idea is to drive better retirement outcomes for DC members in relation to investment performance, costs and charges and quality of services and to support the consolidation of underperforming and poorly run schemes. The Consultation closed on 27 March 2023. The Government’s Response on 11 July 2023 supports these aims. DWP and FCA are expected to consult on proposed changes to existing Regulations to reflect VFM requirements but the government response set no timetable for this. |
| DC SMALL POTS | On 30 January 2023 DWP called for evidence on amalgamating deferred pensioner’s small pots. The Consultation closed on 27 March 2023. On 11 July 2023 the DWP Response and further Consultation proposed a Consolidator model, under which Government would create a clearing house to match pots to member followed by allocation to consolidators; members would be given choice where possible; pots would be eligible for consolidation after 12 months of the last contribution with such pots being no larger than £1000. This further Consultation closes on 5 September 2023. WB comment: a grand design but legislation and brining into effect is probably years away. |
| CITY CODE ON TAKEOVERS and MERGERS Updated Code | On 20 May 2023, the Panel on Takeover and Mergers published the eleventh edition. As before, pension scheme trustees have a seat at the ring in the case of certain proposed corporate activity. |
| “MANSION HOUSE” REFORMS – Chancellor’s announcements on 10 July 2023 | Major potential changes to the pensions landscape announced. With a General Election no later than January 2025, will there be time to make headway? Click here for our News Bulletin issued on 18 July 2023. The papers issued on 10 July 2023 include various Consultations and Calls for Evidence which closed on 5 September 2023. The Calls for Evidence are to help government form its policy, so legislation is a long way off. The upshot of the Consultations will also usually need significant legislation. Click here for the article in Part 4 of this Pensions Compass. |